ATLANTA, GA – Attorney General Chris Carr today wrote to the Biden administration’s Consumer Financial Protection Bureau (CFPB) to request it immediately rescind its final rule requiring financial institutions to unnecessarily collect and report data regarding applications for credit for small businesses. In a letter sent to CFPB Director Rohit Chopra, Carr argues that the rule is gratuitous, burdensome and expensive, with the CFPB itself predicting the action will cost each covered lender tens of thousands of dollars and divert hundreds of staff hours.
“This latest rule from the Consumer Financial Protection Bureau has absolutely nothing to do with the process of evaluating which applicants are the strongest and most deserving of credit, and hardworking Georgians will pay the price,” said Carr. “At a time when access to capital is already difficult, this burdensome action will handcuff lenders and paralyze those segments of the economy reliant upon community banks to stay afloat. Rather than saddling small businesses with burdensome regulations, the Biden administration must immediately rescind this rule and allow states to continue to address lending issues as they occur.”
The CFPB rule implements Section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Specifically, it requires that financial institutions collect and report data as to whether an applicant is a “Minority-Owned, Women-Owned, and/or LGBTQI+-Owned” business. Financial institutions are further required to prompt business owners to disclose their “ethnicity, race, and sex,” which the lender must then report to the CFPB.
As noted in the letter, states already have their own consumer protection and anti-discrimination statutes. Additionally, federal fair lending laws already prohibit lenders from discriminating on the basis of race and other characteristics.
Carr further writes, “This rule purports to ensure our financial institutions follow the laws that prevent discriminatory practices, but it does nothing to accomplish that aim. Instead, this collection of data redundantly saddles our community banks with additional compliance requirements. The constraints involved will cost small businesses precious resources – people, time, and money – resulting in business closures and job losses.”
Find a copy of the letter.